Unbundling of the Car – the Age of Mobility-as-a-Service
Posted on: 11 Jul 2019
Author: Marie Kress, Business Analyst
When observing urban environments worldwide today, it is evident that life has become much more complex, fast-paced and crowded than it was hundreds of years ago. Back in the day, it was a huge step forward for people to be able to be mobile with automobiles, enabling them to reach destinations farther away in less time than ever possible before. We have lived with a car-centric approach to mobility ever since, with almost everybody relying on a car as their main means of transportation on a daily basis. This has led us to a situation, in which every car is on average only occupied by 1.2 passengers, used only 4% of the time and – even when in use – increasingly stuck in traffic congestions. In some metropolitan areas, the situation has already intensified to extreme levels with average speeds of 12-15kmph in city centers, which is even slower than horse-drawn carriages back in the day. This issue alongside many other concerns like carbon emissions, scarcity of space, which is increasingly used for vehicle-centric infrastructure, and many more, makes us take a step back and think. Is our current solution for mobility really the best one? Can we afford to sacrifice air quality, space, time and essentially the quality of life for people in cities for the sake of daily commutes and travels?
For many people nowadays, the answer to those questions is no. There is a growing global movement of Mobility-as-a-Service, which helps and incentivizes people to unbundle their car. This means that instead of relying on a car to solve maybe 80% of their daily mobility needs, they choose the most appropriate transport option for every trip they take, so they have a better match and more freedom to choose from the available mobility options multiple times per day. Mobility-as-a-Service (MaaS) essentially creates a digital touchpoint for users to access various different mobility offerings, ranging from public transportation through bike and car-sharing schemes to ride-hailing or ride-sharing. Already, 40% of people who were interviewed in a recent study by Cox Automotive, state that it is necessary for them to have access to transport, while owning a vehicle is not.
Today, more people than ever are digitally connected and their personal connection to their smartphones is getting ever deeper. This creates a perfect base scenario for digital-first models to evolve. MaaS transfers the previously physical transport experience to a digital-first environment and connects with users in the environment in which they are most comfortable and most active in. This allows for a strong personal bond of passengers with their personalized mobility. However, for this strong bond to be established, a few factors need to be aligned.
Moving from A to B always requires physical transport as well as an element of information about transport, which is just as important. If those elements are not aligned, there is a huge potential for frustration. For example, it is just as frustrating to have an app telling the traveler that there are no mobility options available around him as seeing mobility offerings in the street but not knowing how to access them. In the past, we heavily relied on the concept of ownership to guarantee the availability of mobility whenever needed. This started with owning a horse and a carriage; the only information necessary to be mobile was where the horse and the stable are located. Over time, the horse carriage was replaced by the automobile but the principle stayed the same with people always having control over the car, which was parked in their garage. Only in the last few years with more mobility services evolving globally, the paradigm suddenly started to slowly shift away from ownership towards using mobility-on-demand. But this is only possible in the areas where enough alternatives are available to ensure mobility at all times.
With this unbundling of cars, new market potential will open for transportation modes which haven’t been popular so far, like intercity buses or ride sharing. Those are two examples of mobility modes which have existed before the trend of mobility services but always presented a less attractive alternative for most travelers, due to the hassle related to using them. Early pioneers of the ride-sharing idea had to visit a blackboard in a public place in their town to study piles of paper containing the route information of people willing to take passengers with them then leave their written offer there, only to return a few hours before the planned departure to see if the driver will pick them up and they can have a ride … This did not come close to providing the feeling of guaranteed mobility. Travelers today, however, can conveniently search for rides from their couch with millions of rides just a click away. A similar story can be told about the bus business. While many bus operators rely on a physical asset-centric business model, more and more of them try to migrate their user experience to digital space and follow the example of Flixbus and other digital-native bus businesses, which make bus travels much more accessible and attractive to users. This digital strategy does not only open new market potential but also allows for more ways of data monetization and the expansion of revenue streams for the bus businesses.
Recently, I had the opportunity to discuss the new paths available to bus companies with a number of bus operators, city officials and mobility experts at the Busworld Academy Central Asia in Almaty. Busworld is a worldwide event, gathering mobility and bus experts across the globe to open a dialogue and look for new ways for the business to evolve and contribute to a better future of bus travel and the integration into the new mobility ecosystem.
In conclusion, with the availability and accessibility of a growing variety of Mobility Services, car ownership is becoming less attractive for an increasing number of urban travelers, causing them to change their mobility patterns. Together with many other factors and influences this is causing a gradual reshaping of the mobility and transportation landscape, transforming the car-centric legacy and steering towards a more diverse, on-demand and sustainable future for mobility and travel.
It will still take a long time to change the habits of people and effectively change the mindset away from the idea of owning a car, which is still often seen as the key to freedom of mobility towards seeing freedom of choosing mobility for each trip as the true freedom. In parallel to the switch in mindset and consumption habits of people, mobility services also need to spread to become more widely available and accessible to truly present an alternative for every trip people need to take. This shift is just beginning and Mobility-as-a-Service is still working on improving the reach and variety of the ecosystem but over time and with a lot of pioneers and early movers of the MaaS revolution the market structure can change tremendously over the next decades. After all, the dramatic shift from horses to cars in NYC happened in just thirteen years. Let’s see what will be the next switch we will be looking back at in 3019.